USDA Budget Ends Direct Payments

The administration released its $3.77 trillion budget for FY 2014. The proposed budget would reduce the deficit by $38 billion over 10 years by eliminating direct payments, reduce subsidies for crop insurance companies and producers, and streamline conservation programs.

By P. Scott Shearer, Bockorny Group, Washington, DC | Apr 15, 2013

The administration released its $3.77 trillion budget for FY 2014, which proposes new taxes on wealthy individuals, cuts to Social Security and Medicare with increases for education and infrastructure. Top income earners’ tax deductions would be limited to 28%.

USDA’s budget is estimated at $146 billion. Nearly 83% of the budget is associated with mandatory programs, such as crop insurance, nutrition assistance, farm commodity and trade programs and various conservation programs. The remaining 17% is associated with discretionary programs, such as food safety, rural development loans and grants, research and education, animal and plant health, national forests, soil and water conservation technical assistance and Women, Infant and Children (WIC) program. The proposed budget would reduce the deficit by $38 billion over 10 years by eliminating direct payments, reduce subsidies for crop insurance companies and producers, and streamline conservation programs.

The budget assumes USDA will have approximately 5,000 less staff years compared to FY 2009. Budget highlights:

· Direct payments are eliminated, saving about $30 billion over 10 years.

· The Conservation Reserve Program (CRP) is assumed to increase to 27.6 million acres in 2014. The budget proposes capping CRP acres at 25 million acres by 2018.

· Extends mandatory disaster assistance for livestock.

· The subsidy for producer crop insurance premiums would be reduced by 3 percentage points for policies where the government subsidizes more than 50% of the premium. Premium subsidy would also be reduced by 2 percentage points for revenue coverage that provides protection for upward price movements at harvest time.

· Provides $5.5 billion for loans to an estimated 34,000 farmers and ranchers to cover operating costs and purchase or refinance of farm property.

· Supplemental Nutrition Assistance Program (SNAP) – assumes participation to drop to 44.7 million individuals from 47.1 million in 2013.

· Fully funds the WIC program at over $7 billion to support 8.9 million individuals (low-income pregnant women, new mothers, their infants and young children).

· Supports the Market Access Program and the Foreign Market Development program. These programs need to be reauthorized in this year’s farm bill.

· Provides $25 million for a new feral swine program.

· Proposes food safety user fees from plants for additional inspections and related activities made necessary due to the failure in performance of the plant (estimated at $4 million annually).